[ 2011-10-14 ]

A person uses the new Blackberry Bold 9900 at a release party to promote the BlackBerry OS 7 devices in Toronto on 3 August 2011

RIM scrambles to end global BlackBerry outage
The company that makes the BlackBerry smartphone
is working frantically to end a three-day global
service disruption that has frustrated millions of
its customers and pumped up pressure on its
management to make sweeping changes.

Research In Motion, in a hastily announced
conference call on Wednesday, vowed to eventually
deliver all delayed email and instant messages to
customers in five continents affected by the
outage.

It later told some of its corporate clients that
it may not clear the huge backlog of messages
until Thursday morning on the U.S. East Coast.

The outage - and RIM's sluggish communications
with its customers - have fanned rising
dissatisfaction with its co-chief executives, Mike
Lazaridis and Jim Balsillie.

Critics have called for a shake-up, saying the top
managers have let the company fall too far behind
Apple and other rivals in a rapidly changing
market.

"The board clearly needs to take decisive action
now - they need to draw a line in the sand," said
Richard Levick, who runs a consultancy that
specializes in crisis management.

"RIM needs to change its DNA entirely - they need
to start thinking like a startup again, instead of
a former market leader," he said.

Though RIM's stock dropped modestly on Wednesday,
its shares have already tumbled more than 50
percent this year on a series of profit warnings
and product missteps - a sharp reversal of fortune
for a company that once dominated the smartphone
market.

This week's disruption - the worst since an outage
swept North America two years ago - may have
damaged RIM's once-sterling reputation for secure
and reliable message delivery - perhaps its No. 1
selling feature.

RIM is unique among handset makers, as it
compresses and encrypts data before pushing it to
BlackBerry devices via carrier networks. Apple and
others rely on the carrier networks to handle all
routing and delivery of content.

Even before this week's disruptions, many
companies had started to balk at paying a premium
to be locked into RIM's service. Some are now
allowing employees to use alternative smartphones,
particularly Apple's iPhone, for corporate mail,
and the outage could accelerate the trend.

"One possibility could be that it encourages
client companies to look more at other options
such as allowing users to connect their own
devices to the corporate server and save
themselves the cost of buying everyone a
BlackBerry," said Richard Windsor, global
technology specialist at Nomura.

DLA Piper, a law firm with 4,200 attorneys
worldwide, is a prime example. It is accelerating
discussions about switching to iPhones and Android
devices, Don Jaycox, its chief information
officer, said on Wednesday.

"This has brought it to the front-burner," Jaycox
said. "It will cause more people to opt for other
choices."

UNIQUE SYSTEM

The corporate defections are making a big software
transition even more crucial to RIM. The company
is getting ready to shift its line of BlackBerry
smartphones to the new central operating system
first used in the poorly received PlayBook
tablet.

Without a successful shift, RIM may never regain
market share lost to the iPhone and devices
powered by Google's Android, analysts say.

"It's a blow upon a bruise. It comes at a bad
time," Nomura's Windsor said, referring to
Wednesday's service disruption.

While corporate customers were weighing their
options, BlackBerry users were venting their
frustration at the company and what they said was
its failure to keep its customers informed.

"Totally appalled at the lack of communication
from RIM," wrote Lynn Murdoch on RIM's BlackBerry
Facebook page. "Love my Berry, but furious at the
fact that no one can actually give a time frame of
how long its going to take to fix. Utterly
disappointed!"

"I'm right at the edge where I might be saying
goodbye to my BlackBerry," said Tony Vitali, a
BlackBerry user in New York. "The device freezes
twice a day. ... It's a very frustrating device."

BAD TIMING

From a marketing standpoint, the timing of the
service glitch could hardly have been worse for
RIM.

Apple on Wednesday launched an major upgrade to
its iOS operating system that includes iMessage,
an instant messaging service for users of Apple's
iPhones, iPads and some iPods. It is a direct
competitor to RIM's BlackBerry Messenger, or BBM.

The RIM service, which allows BlackBerry users to
send free text messages to other BlackBerry users,
has made the devices a popular choice with young
consumers. That has partially compensated for its
losses in the corporate market in North America
and Western Europe.

On Wednesday RIM's shares closed down 3.46 percent
at C$24.27 on the Toronto Stock Exchange and down
2.17 percent at $23.88 on the Nasdaq.

Source - Reuters

... go Back